Canaccord Genuity technology analyst Bobby Burleson initiated research coverage on Marvell Technology Group (MRVL) with a BUY rating and $20 price target. Mr. Burleson said:
“We expect revenue and earnings growth to outstrip the broader semiconductor market in 2012, based on a recovery for the company’s core HDD [hard disk drive] business, rising demand for TD-SCDMA smartphones, and a shift to merchant SSD [solid state drive] controllers that should favor MRVL’s technology leadership.”
Expanding on each point, he added the following:
Core market positives – Anticipate HDD shifts from headwind to tailwind in F2013, with faster-than-expected adoption of 500G drives due to component shortages (MRVL with 100% share).
Mobile and Wireless inflection – Marvell should benefit from TD-SCDMA smartphone growth (70% share) and non-TD-SCDMA Android smartphone growth in emerging markets. Marvell has first mover advantage in the TD-SCDMA smartphone market.
Play on SSD – SSD controllers are transitioning from captive to merchant solutions as performance needs grow with increasing read/write cycles. Marvell should be well positioned to benefit from this shift to merchant SSD controllers.
